Federal tax and State tax withholding

[NuttySquirrel]

What is the name of your state (only U.S. law)? New York

Hello everyone,

I have two tax related questions. Keep in mind I'm not the slightest bit knowledgeable when it comes to taxes, so bare with me if these are silly questions!

1) A coworker and I were comparing paychecks and I noticed he wasn't having federal or state tax deducted. At the top, where the exemptions and allowances are listed, it shows:

Federal: 5, Tax Blocked
NY: 4, Tax Blocked

What does this mean? I'm kind of thinking that instead of having federal and state taxes deducted every week, he just pays them when he does his taxes. But I didn't think it was right to ask him.

2) When I first started at my current place of employment, I was single. I am now married. I asked my employer if I should change the taxable marital status that appears on my paycheck from single to married, and their response was "only if you end up having to pay in more at tax time than you did last year". So I left it single. Is this ok, or could I be penalized for leaving it single?

Thank you kindly for your input!

 

[TinkerBelleLuvr]

What is the name of your state (only U.S. law)? New York

Hello everyone,

I have two tax related questions. Keep in mind I'm not the slightest bit knowledgeable when it comes to taxes, so bare with me if these are silly questions!

1) A coworker and I were comparing paychecks and I noticed he wasn't having federal or state tax deducted. At the top, where the exemptions and allowances are listed, it shows:

Federal: 5, Tax Blocked
NY: 4, Tax Blocked

What does this mean? I'm kind of thinking that instead of having federal and state taxes deducted every week, he just pays them when he does his taxes. But I didn't think it was right to ask him.

2) When I first started at my current place of employment, I was single. I am now married. I asked my employer if I should change the taxable marital status that appears on my paycheck from single to married, and their response was "only if you end up having to pay in more at tax time than you did last year". So I left it single. Is this ok, or could I be penalized for leaving it single?

Thank you kindly for your input!

A W-4 is what the employers use to calculate the amount of taxes to be taken out of your check.

Start here:
http://www.irs.gov/individuals/article/0,,id=96196,00.html

 

[FlyingRon]

He should be having taxes withheld. While you can declare yourself exempt (W-4E) you can only do so if you do not expect to owe tax at the end of the year. You can usually get one year of grace, but he's risking having to pay a penalty for not timely paying his taxes.

As tinkerbell says if your situation changes that would change your withholding, you can submit a new W-4 to your employer. Your employer is correct in that you only NEED to do so if you think the existing declared withholding exemptions/amounts are not sufficient.

 

[ecmst12]

The withholding for single is higher than for married, so your refund amount will be higher at the end of the year. There's nothing wrong with keeping your withholding at the higher rate, I have done that also. There's actually a box on the W4 that you can check for "Married, but withhold at the higher single rate". If you'd rather have less taken out each check and have a smaller refund at the end of the year, then update it to withhold at the married rate.

 

[tranquility]

The designation of married on withholding is best used for a single worker who is married. (In that the spouse does not work.) When both are working, withholding as single is often better.

 

[swalsh411]

Your coworker may be making estimated payments on his own and including what should have been withheld from his check with this payment. You can't just wait until you file your taxes to pay the entire year liability unless you want to pay a substanial underwithholding penalty. The government would not be able to operate if everybody did this.

The only correct response from an employer when an employee asks what they should put on their W-4 is "We cannot provide tax advice. Please speak with a tax professional.".

 

[FlyingRon]

Your coworker may be making estimated payments on his own and including what should have been withheld from his check with this payment.

That's still not legal. You can't opt out of withholding if you had tax liability last year or you expect to have some for this year. In fact, if the employer knows the employee is not exempt, they're required to use the default withholding (as if the employee had not completed a W-4, computed on no withholding allowances).

 

[swalsh411]

That's still not legal. You can't opt out of withholding if you had tax liability last year or you expect to have some for this year. In fact, if the employer knows the employee is not exempt, they're required to use the default withholding (as if the employee had not completed a W-4, computed on no withholding allowances).

I didn't say it was legal just that some people do it.